'Our discussions with investors and the market's multiples suggest that Prime Minister Narendra Modi winning 2019 is being priced in,' says a UBS report.
Analysts caution a non-BJP government is not an impossible scenario. In case of a Modi-led coalition, they advise investors to focus on discretionary consumption, select private banks and financials, RIL, housing, and IT.
The trend in corporate earnings suggests that index earnings could fall to the levels last seen in early 2014.
Aptech, Lumax Industries, Vedanta, Indian Bank, Venky's India have appreciated over 200% in a year
Experts say, investors will be better off exiting them at higher levels and investing in stocks of fundamentally sound companies.
Liquidity pushed benchmark indices 22% higher to become the best performing equity market globally
If the rupee falls further, it would negatively impact the dollar-based returns of foreign investors, and could influence foreign flows into India.
Experts believe volatility is here to stay for some time, at least till China stabilises and clarity regarding the US Fed's interest rate move emerges.
Market players said the sell-off was triggered by pessimism that the government may not be able to balance growth with macro-stability.
The markets will remain choppy ahead of RBI policy.
Rupee, bonds may see knee-jerk reaction, as Urjit Patel is considered an inflation warrior
Local businesses are fretting over reform setbacks.
Being one of the early commentators to flag economic slowdown and caution investors on corporate earnings, Gautam Chhaochharia, head of India research, UBS Securities, in an interview with Hamsini Karthik says the markets remain in an expensive zone despite the recent correction.
A section of analysts feel now may not be a bad time to buy select PSBs.
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